Population Shift Hurting State Economy

In a study done by the Connecticut Economic Resource Center (CERC), researchers reported that while Connecticut currently has high productivity and a highly educated workforce, issues such as lack of business and job growth and an aging population threaten to harm the state's economic competitiveness.

The report, "Benchmarking Connecticut's Economy," which was released last month, compared Connecticut to other states in terms of five key areas - technology, financial resources, business vitality, human capital and global links. It examined the state's competitiveness in these areas in terms concentration, meaning its current level of a given area and in terms of growth, meaning its annual rate of change. According to the findings of the report, growth in all five areas is lagging.

Alissa DeJonge, an economist at CERC and project manager for the study, said the purpose of the report was to motivate Connecticut officials to take action.

"I think, overall, the report is telling us that we can't be complacent any longer," DeJonge said. "We see that jobs aren't growing. We see we're not getting as many businesses as other states ... and we need to create a strategy that would enhance the state and help us move forward."

Dr. William Lott, director of research at the Connecticut Center for Economic Analysis and associate professor at UConn, said the lack of growth in Connecticut is due to the large number young adults leaving the state. According to the CERC report, between 1990 and 2000 Connecticut experienced the greatest loss of people between the age of 18 and 35 relative to any other state.

"We're one of the oldest states in the nation in terms of the average age of the population and it's getting worse," Lott said.

Lott said the lack of young adults in Connecticut could become problematic in the future as the state's older population leaves the workforce.

"You're looking at people who are in that 35 to 40-year[-old] bracket as sort of in the peak of their productivity and if we don't have those [younger] workers, obviously, this outflow is going to have a rolling effect as we move up in the years," Lott said. "That's going to have an adverse effect on our productivity and ability of the state to maintain its relative competitiveness."

Lott also said that in the future Connecticut's aging population will impose large healthcare costs on the state.

"And what's going to happen is we're not going to have the younger tax base to help bare the burden," Lott said.

Lott said the low number of young people in Connecticut can be attributed to the state's zoning policies, which make the housing less affordable for young families.

"With so many towns trying to restrict growth ... their zoning is basically reducing the amount of available building lots and so you're really increasing the cost of housing," he said. "When they have zoning rules that are two-acre, minimum square-footage rules and things like that, those are all just discriminating against younger people."

In addition to the migration of young adults out of the state, the report also indicated trends in the migration of businesses out of the state.

"Some of our major industries have been declining over the past few years," DeJonge said. "Insurance is one of them ... The defense industry also used to be a very big industry-driver in the state and it's leaving, so some of our more historical industries have been leaving the state."

While DeJonge said the factors behind the decline have not been thoroughly studied yet, Lott said Hartford zoning policies are a factor behind it. He said the policies, which include heavy tax burdens, hearings and other lengthy procedures, give companies little incentive to come or to remain in Connecticut. It also makes them easy targets for being bought out by other companies in other states.

"The city of Hartford is a very small geographical area and we've put a lot of tax burdens on the companies in Hartford, so they have not been able to grow, and to the extent that they have not been able to grow, they have become natural targets for takeover," Lott said.

Lott said in order to get companies to move back into the state, policies need faster procedures and more tax incentives for corporations.

"We ought to be thinking about, 'OK, here are a whole bunch of properties.' We're going to pre-zone them and say 'If you want to come in and establish a firm on this property, you can have a permit in six weeks. This land is already pre-approved for BioTech.' That's going to cut the costs to a BioTech firm to locate there," Lott said.

Lott also said developments like Adrian's Landing will help attract more businesses and create more job growth.

"[Adrian's Landing] helps create a better environment, a more attractive environment and to that extent, it's a positive when we try to recruit and retain businesses." Lott said. "And again, it's attractive to young people."

"I think Adrian's Landing is a good step, and a good boost for Hartford but it's not going to keep everyone in Connecticut," DeJonge said. "It's not taking care of all the residents in Connecticut. And since there hasn't been any job growth in the state in the past 15 years, that could be the one reason why some students are leaving the area."

Lott said Connecticut needs to take steps to become more business-friendly in order to keep jobs and ultimately, graduating students in the state.

"If the state - if we don't do something - [students] are going to say 'Where am I going to get a job in Connecticut. Can I afford to live here? Or does the research triangle in North Carolina look much more attractive to me?'" Lott said.

Lott said he believed steps must be taken.

"UConn will simply become an exporter of human capital to the rest of the U.S.," Lott said. "We will spend state dollars to educate students for other states."

"I think we're educating a lot of really smart people in the state," DeJonge said. "If we don't have the right jobs for them, they might leave, and so I think the concern that we might be exporting students after they graduate is a concern held by many."

According to DeJonge, the CERC study seeks to find solutions to problems such as these while Connecticut's economy is still in good standing.

"I think really what the report says is that Connecticut today is doing pretty well in those five benchmark areas, but the trends are showing that if we stay the same - if we don't change - we may lose our competitiveness," DeJonge said.